LOAN PERFORMANCE AND BANK FAILURE IN NIGERIA

This project work examines the impact of loan performance on bank failure in Nigeria. The work referred to both theoretical and empirical approaches in determining the extent to which loan performance (credit risk) affects the chances of bank survival in Nigeria. This has become necessary as bank failure poses a serious danger to stakeholders in the financial system. This work focused on impact of loan performance on bank failure using annual panel data of 17 selected banks for the period of 2004- 2007. The Binary Logit model was used for the study. From the study, it was deduced that excess risk taking by banks Results to high volume of non-performing loans which accumulates as credit Risks and builds up over time to reduce their asset quality and predispose them to Failure. Thereafter, adequate lending policies should be be put in place to help check excess risk taking by banks so as to reduce the tendency of accumulating bad loans over time In order to promote a strong and stable financial system Nigeria.